The link between firm risk-taking and CEO power of listed firms on the Vietnamese stock market: the role of state ownership

Abstract

The chief executive Officer (CEOO) is pivotal in firm governance and is tasked with policy implementation and maximizing shareholder benefit. however, predicting ceObehaviour remains challenging, especially when considering ceO power (ceOP). hence,this study explores the link between ceOP and firm risk-taking (FRt) in selected firmson the stock market in Vietnam from 2010 to 2020. Utilizing the entropy weightmethodology, a ceOP index combines structural, ownership, and expert powerindicators. the sYs-gMM approach mitigates potential endogeneity issues, revealing apositive correlation between ceOP and FRt. interestingly, ceO risk aversion increases instate-owned firms’ participants, suggesting heightened supervision. Moreover, eachcharacteristic of the ceOP index uniquely influences FRt. the findings offer theoreticaland practical insights for enhancing governance and supervision mechanisms tooptimize stakeholder benefits.